Legality of Bitcoin or Cryptocurrency. Crypto Legal
When we talk about crypto currencies and Bitcoin, you must be aware of the fact that the advanced technological innovation has not received 100% of legal framework and been fully implemented across many nations in this world. There are several legal issues related to Bitcoins, and this is what we are going to discuss in this article.
Legal or Illegal status of the Bitcoin
Depending on the relevant nations, the Bitcoins have varying legal aspects. There are some countries nations that regard the crypto currency as a legal currency or money, while others consider it just as legal tender and as an asset. On the other hand, there are several nations that consider it being illegal, and some neither legal nor illegal without any sort of proper framework.
Countries that regard Bitcoin as Illegal
The list of those nations that consider Bitcoin and other crypto currencies as illegal are:
- China, while for private citizens it is considered legal
Legal status of Bitcoin by list of these Nations
The list of nations which consider Bitcoin as legal and in some cases even considered as money are as follows:
- South Korea
Taxation Issues with Bitcoin and Cryptocurrency Income
Whenever we speak about the legal issues associated with Bitcoin or crypto currencies, taxation is one aspect that cannot be totally ignored. If you are using Bitcoin, to reduce taxation or hide your assets from taxation authorities, it is not a really difficult thing to do. This is mainly because of the pseudo name or anonymity with Bitcoin. It is only possible only when you abide by proper precautions.
There are several nations that consider Bitcoin as an asset, especially with respect to taxation. For instance, in the United States of America, Bitcoin falls under the class of an asset. There are possible to be some issues with the taxes, when you are bringing in a huge amount of foreign currency into any nation. If you are a legitimate tax payer, you can declare your Bitcoin revenue and assets at the exchange rates in several places.
Depending on your location’s tax laws and regulations, it is always recommended to keep a record of Bitcoin or crypto currency income, and even declare it. In the countries, where Bitcoin is regarded as illegal, there is no such taxation rules or laws for crypto currency. It is absolutely illegal to avoid paying the applicable taxes, there are certain legal loopholes available of course.
Research your jurisdiction’s taxation related laws and pay the correct taxes on your Bitcoin or crypto currency income. There are nations that consider Bitcoin or crypto currencies as an asset, and not a currency. The whole tax concept differs under such situation.
The Issue with Money Laundering Using Cryptocurrencies
Money laundering is yet another of the key legal issues associated with Bitcoin or crypto currencies. This is because of one very simple reason. With Bitcoin, you can execute a transaction of money between multiple nations within a matter of few seconds, without any monitoring or checking at all. Due to such current money laundering issue, Bangladesh has completely banned Bitcoins. There are some other nations as well as above mentioned for different reasons banned or consider Bitcoin as illegal.
The presence of blockchain ledger technology guards against the use of money laundering on a very large scale. New and advanced technologies are coming up which help the Bitcoin or crypto currency ledger to identify the whereabouts of the funds that are undergoing transactions at whatever places.
Money laundering is not Illegal everywhere
No matter, money laundering is illegal everywhere, although there are some exceptions. For instance, in South Korea, money laundering is considered to be legal as long as there are no kind of illegal activities involved. In any case of illegal activity, including the case of Bitcoin, it will be conducted in the court of law. This move was initiated there because South Korea didn’t want to outlaw Bitcoin.
Some other type Legal Issues related to the Bitcoin
Some of the other highlighting legal issues associated with crypto currency or Bitcoin are as follows:
- There are many cases of large numbers of thefts of Bitcoins that calls for an action. For example, a case of the Mt. Goux exchange due to which pressure was put on the regulators of Bitcoin.
- The EU court hearings regarding VAT application on Bitcoin. The court declared Bitcoin as VAT free. This is similar to the case of gold.
- The banning of crypto currency and considering them as illegal in some of the nations.
- The declaration of Bitocoin as an asset in the US, keeping taxation under consideration. Bitcoin is considered as a virtual currency in the nation.
- It is highly challenging to establish or prove when Bitcoin private keys are lost.
- There are hidden assets of Bitcoins which are difficult to discover.
- There is no legal protection to owners as required.
- Possibility of scams is too much
- The online drug market also gets encouraged
Countries where Bitcoin is Restricted, but legal under Some Circumstances
Let us have a look at the countries which deem Bitcoin as legal, but in restricted form:
The country allows you to buy, sell, trade and transact Bitcoins. But, the ATMs for Bitcoin are not considered legal there.
China considers mining of Bitcoin as legal. But, only the private people are allowed to transact in Bitcoins, and not any banks or corporate institutions.
The country doesn’t allow buying and selling of Bitcoin, but mining of Bitcoins is absolutely legal over there.
Bitcoin has still not been properly regulated in majority of the economies world over. There are certain complications and many legal issues associated with it. Though some countries have banned it and consider them illegal, Bitcoin has a high potential to become a global currency in the near future, according to the ongoing trend. If there is a proper legal framework included in the current financial system, Bitcoin and other crypto currencies really have a massive growth potential. Certain legal developments are underway, and some more will be developed over a short period of time, which will prove bad and good for Bitcoin and other crypto currencies.
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